Oil Prices Hold Steady as Markets Weigh Tariff Threats and Demand Trends

Oil prices remained largely stable on Thursday as markets absorbed the potential global economic fallout from U.S. President Donald Trump’s renewed tariff threats, while a softer U.S. dollar and strong U.S. gasoline consumption helped support the market.

As of 8:00 a.m. Saudi time, Brent crude futures inched up by 4 cents to trade at $70.23 a barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude slipped slightly by 1 cent, settling at $68.37 a barrel.

Investor sentiment was cautious amid concerns over Trump’s escalating trade measures. On Wednesday, Trump threatened Brazil—the largest economy in Latin America—with a punitive 50 percent tariff on its exports to the United States following a dispute with Brazilian President Luiz Inácio Lula da Silva. Additional tariffs were also announced targeting copper, semiconductors, and pharmaceuticals, with tariff notices reportedly sent to countries including the Philippines, Iraq, South Korea, and Japan.

The renewed focus on trade friction raised questions about the potential drag on global economic growth and energy demand, particularly in Asia. Analytics firm Kpler noted that the uncertain macroeconomic outlook had created a more restrained buying environment in key Asian markets. However, geopolitical tensions appear to have eased, with the ceasefire between Israel and Iran continuing to hold, reducing risk premiums on oil.

Minutes from the U.S. Federal Reserve’s June 17–18 meeting revealed that only a few policymakers were inclined to support interest rate cuts in the near term, as inflation concerns persist—partly driven by the administration’s trade policies. Higher interest rates typically dampen oil demand by increasing borrowing costs.

In contrast, a weakening U.S. dollar in Asian trading provided upward support for oil prices, making crude more affordable for buyers using other currencies. Additionally, recent data from the U.S. Energy Information Administration (EIA) showed that while crude inventories rose last week, gasoline and distillate stocks declined. Gasoline demand climbed by 6 percent to 9.2 million barrels per day, suggesting continued strong consumer activity.

A client note from JP Morgan highlighted robust transport activity, with global daily flights averaging 107,600 during the first week of July—a record high. Chinese air travel hit a five-month peak, while port and freight data indicated continued strength in global trade.

On the supply side, doubts linger over whether OPEC+ will effectively increase production despite announcing plans to raise quotas. Some members are already exceeding their targets, while others, such as Russia, face operational constraints due to infrastructure damage, according to analysts at IG.

OPEC+ is expected to finalize another production boost for September as it completes the rollback of voluntary cuts by eight member countries and adjusts the UAE’s quota upward.